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Consumer Staples Stocks: Stragglers in Q1


Apr. 5 2019, Updated 8:05 a.m. ET

Stocks that underperformed 

The consumer staples sector had decent gains in the first quarter. Most packaged foods companies, tobacco, and personal care product manufacturers had stellar growth in their stocks. General Mills (GIS), Conagra Brands (CAG), J.M. Smucker (SJM), Tyson Foods (TSN), and Mondelēz (MDLZ) shares rose 32.9%, 29.9%, 24.6%, 30.0%, and 24.7%, respectively.

Personal care product manufacturers’ shares including Procter & Gamble (PG), Colgate-Palmolive (CL), Estée Lauder (EL), and Coty (COTY) rose 13.2%, 15.2%, 27.2%, and 75%, respectively. Philip Morris (PM) and Altria (MO) stock rose 32.4% and 16.3%, respectively, in the first quarter.

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Despite 10.5% growth in the first quarter, the Consumer Staples Select Sector SPDR ETF (XLP) lagged the benchmark index, which rose 13.1%. XLP generated lower returns than the Technology Select Sector SPDR ETF (XLK) and the Consumer Discretionary Select Sector SPDR ETF (XLY), which rose 19.4% and 15.0%, respectively, in the first quarter.

Weakness in Walgreens Boots Alliance (WBA), Kraft Heinz (KHC), and Kroger’s (KR) stock prices weighed on the consumer staples ETF. XLP invests ~6% of its holdings in Walgreens Boots Alliance, Kraft Heinz, and Kroger.

What’s impacting the stock prices?

Weak financial performances, more competitive activity, soft guidance, and business reinvestment needs are impacting Kraft Heinz and Kroger’s stock prices. Walgreens and CVS Health’s (CVS) stock prices are impacted by more reimbursement pressure on their earnings.


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